Ever have one of those experiences where you think everybody in the world is crazy except YOU?
What do you do to remedy the situation?
Even worse, what if this situation involves money!
Well here is an unbelievable story involving the magical world of mortgages, and the brilliant yet unreasonable people who deal with them…
A mortgage company whose name shall remain confident (perhaps we’ll just call them snidrajseD) is royally screwing a person in my office.
She currently has a mortgage with Desjardins on her house on Niagara Street. For the past four years, she has been paying $1500 every two weeks into her mortgage. The minimum monthly payment? Only $855.00. It’s not like she’s a financial risk…
Having an original mortgage on this property for $398,000, she now has only $72,000 remaining on her mortgage.
A few weeks ago, she sold Niagara, and purchased a property on Warwick for around $500,000.
Desjardins held the old mortgage on Niagara, and they approved her for a new mortgage on Warwick.
Here is where the problems start.
The purchase of Warwick closes two weeks before the sale of Niagara, so we hear those two lovely words: “bridge financing.”
That makes some people cringe, but in the real world, it’s just a simple reality. The dates don’t always match up perfectly
So in order to get the bridge financing, in any normal circumstance, there would be a collateral loan agreement in place to acquire the funds for this two week period in between closings.
Not in this case.
No, instead, Desjardins has requested that the bridge financing be in the form of a registered mortgage, and what’s more is that they want it secured by the original mortgage on Niagara—a mortgage that they already hold! Even more to the point, they also requested that it be registered against the second property on Warwick as well!
So in a case where normally a collateral loan agreement is used, Desjardins wants the two-week bridge to be a registered mortgage secured by TWO properties.
Oh, and did I mention that they will be charging a whopping 8.75% interest rate?
They are also charging a $500 “administration fee” for the bridge!
Not surprising, considering how this company is run. Here’s an example: every year for the past four years, this lady has increased her mortgage payments by 15%. She does so in December, and Desjardins requires that she pay the current payment AND the new increased payment at the SAME TIME! Who has the resources for TWO mortgage payments around Christmas? Luckily, this lady does…
So January rolls around, and only ONE payment has been recognized on the statement. February becomes March, and as we move through the spring towards the summer, she finally gets around to making the all-important call to Desjardins to ask “What the hell?” And every year, the person on the other end of the line says, “Ooooh yeah….whoopsie! Let us update that for you.”
So back to the quandary at hand, Desjardins refuses to give a bridge financing to this client of theirs, with whom they’ve had a long-standing relationship, who has always paid on time, who has constantly paid MORE than the minimum payments, and who is in great financial standing.
The most amazing part about this is that the new house on Warwick, valued at $500,000, is only requiring a mortgage of $72,000—the original principal remaining on the old house on Niagara! So this lady of great credit and excellent financial standing, has equity of $428,000 on her new $500,000 house, and for some reason, Desjardins has decided they need to secure their bridge financing for the paltry two week period that it is required.
If Desjardins had their way, and the bridge financing was registered as a mortgage, and secured against TWO other mortgage of TWO other properties, think of all the extra expenses this poor woman would have to endure. The discharge of these two mortgages would require more attention from her real estate lawyer, and thus more associated fees. City Hall would surely charge a few bucks to get these discharges in order, and Desjardins might require an “admin fee” here or there.
This whole situation is the definition of “unbelievable,” yet she feels utterly helpless to do anything to change it.
The question that just begs to be asked: If this is how Desjardins is willing to treat a mortgagee with whom they have a history and that has all her finances in order, how the heck would they treat the proverbial man-off-the-street who comes to them for a brand new mortgage?